Musings of a madman. On Friday the seventeenth of July 2026, Taiwan Semiconductor Manufacturing Company reported a 77% jump in quarterly operating profit and its share price fell seven percent. See, it is not just you, Shopify.
Sit with that for a second, because everything else in this disputation is downstream of it. I have been listening to Tim Marshall lately and he talked about the Age of Reason. I felt right in that moment last Friday. It spawned research to sit on top of the headlines, the side chats and the LinkedIn guff too. Markets are not my forte but they influence much of what we see and hear.
Kavanagh-esque. If you know, you know.Gloss of the author
Back to Taiwan SMC. The most strategically important manufacturing company on the planet, the firm that physically etches the future onto silicon at a resolution measured in atoms, delivered results that would have triggered a champagne order in any other decade, and the market marked it down like a bakery with yesterday’s bread in the window.
It was not alone. The Philadelphia Semiconductor Index fell 12.5% across the week, its worst run in more than fifteen months, closing more than twenty percent below its late-June peak and crossing, by the technical definition, into a bear market. Some $3.3 trillion in global semiconductor market value had evaporated since 22 June. SoftBank, which the market treats as a proxy for OpenAI the way a weather vane is treated as a proxy for the weather, dropped nine percent. Nvidia slipped enough to briefly hand the world’s-most-valuable-company crown back to Apple, which must have felt like being overtaken on the motorway by a man on a ride-on lawnmower. In Hong Kong the Chinese AI names got it worse than the Americans: Z.ai down thirty percent, MiniMax down sixteen.
The Nvidia move sparked Jensen Huang into action on Twitter, overshadowed only by Bernard Arnault and his letter of perfection.Marginal note
The trigger was a model. On 16 July, at the World Artificial Intelligence Conference in Shanghai, a Beijing startup called Moonshot AI released Kimi K3. Two point eight trillion parameters, a mixture-of-experts architecture, a million-token context window and, critically, open weights. The largest open model ever released. It benchmarked competitively against the frontier, it cost a fraction of the frontier to run, and Moonshot announced the full weights would go public on 27 July. Richard Hendricks would be proud.
Anyone could have them. Anyone can still have them, as of this week. Independent testing put Kimi K3’s hallucination rate at roughly fifty-one percent.
51%. I thought I was hallucinating. Dad joke.
A model that is wrong about half the time moved three and a third trillion dollars of capital in four trading sessions, in the same week that the world’s most important chipmaker beat its numbers by seventy-seven percent and was punished for it.
The result is a loud expression of doubt.
And this is the number I would tattoo on the inside of my eyelids. The Philadelphia Semiconductor Index, having lost a fifth of its value and crossed into a bear market and triggered a global panic, remained up more than sixty percent on the year.
As I mentioned, I am not even a novice in this field yet. But it is interesting.
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